Freedom Sale Plan Outlined

September 12, 1989|By Brad Kuhn Of The Sentinel Staff

NAPLES — Federal regulators are expected to assume most of the assets of insolvent Freedom Savings and Loan Association of Tampa in a sale to be negotiated in the next several weeks, a top thrift liquidator said Monday.

William Dudley, Southeastern regional director of the Resolution Trust Corp., told thrift executives at the annual meeting of the Florida League of Financial Institutions in Naples that the RTC will probably keep more than $800 million in loans and other assets from Freedom, which has $1 billion in assets. Consequently, the buyer will have to accept only $200 million in loans.

The RTC is a federal agency created in August to handle more than 270 insolvent savings and loans.

Bidders for Freedom reportedly include NCNB Corp. of Charlotte, N.C.; SouthTrust Corp. of Birmingham, Ala.; Citizens and Southern Corp. of Atlanta; and Great Western Bank of Beverly Hills, Calif. The bidders would be asked to assume Freedom's $1.5 billion in deposit liabilities and to purchase some safe assets, such as single-family residential mortgages, a process known as ''cleaning the institution'' for investors.

''Freedom will be handled as a very clean transaction,'' Dudley said.

The buyer would also be asked to purchase or assume the leases on Freedom's 37 office facilities, including 19 in Central Florida.

The RTC would provide the buyer with deposits backed mostly by cash obtained by borrowing against 85 percent of the market value of Freedom's assets. Dudley said such transactions will give the RTC the leverage it needs to stretch the agency's $50 billion bond issue to cover the closing of 270 thrifts nationwide. Skeptics have said that the $50 billion authorized by Congress to address the problem will not be nearly enough.

''If we were limited to $50 billion we would spend that in two months,'' Dudley said.

The RTC said last week that Freedom was selected as one of the first 10 large thrifts to be put up for sale because of significant investor interest.

The anticipated ''clean institution'' structure Dudley anticipates for the transaction would speed up the bidding process by eliminating the need for haggling over Freedom's bad loans.

Regulators have said that Freedom, with a net-worth deficit of more than $500 million, represents one of the largest insolvencies in the nation. The thrift was taken over by federal regulators in 1987.